The March 11th tsunami that has devastated Japan is expected to create shortages of Apple's most popular products for the remainder of the month and through next quarter, as at least two of the company's core component suppliers in the region have temporarily shut down operations to assess damages.

Speaking to contacts in Asia last night, Piper Jaffray analyst Gene Munster learned that the production status from Apple's Japanese-based component suppliers is changing hour by hour, but said that none of those partners have been able to quantify the extent of their damage with any degree of certainty, nor have they set a timeline for when production will resume.

In particular, Munster said that Mitsubishi Gas Chemical Co, which he believes is Apple's primary supplier of BT resin -- used in producing printed circuit boards for chips in iPhone and iPad -- is temporarily shut down to assess damage related to the earthquake. Similarly, Toshiba, which produces around 40% of the world's flash memory and supplies a significant portion of that to Apple for its iOS devices, is temporarily shut down for the same reasons.

As such, the analyst expects component delays for some of Apple's key products, including iPhone 4 and iPad 2, to persist throughout the June quarter. That said, he notes that the company's investor community has historically chosen not to punish the company for supply-related issues as long as demand for Apple products remains strong. In this case, "demand is stronger than ever, which should move shares higher," he said.

Potentially helping to mitigate the affect of this month's natural disaster is Apple's strategic component purchasing deals, which have seen the company secure long-term supply arrangements (1, 2, 3, 4) for key components such as flash memory and displays from multiple vendors in order to create a layer of protection and redundancy that kicks in during situations such as these.

"This strategy has proven to be an effective way for Apple to leverage its balance sheet and its position as one of the largest buyers of many of the components it uses; moreover, this strategy may prove particularly helpful if supply is limited and pricing increases," Munster said. "Finally, we believe Apple buys futures on important components, which will help offset near-term pricing swings. Our conclusion is that Apple is well positioned to suffer proportionally less than its competitors."

Although the analyst isn't concerned with Apple maintaining its well-above-average profit margins during the March and June quarters, he does believe rising component prices as a result of the Japanese quake could apply some downward pressure on profits during the second half of the year as component prices may rise.

On the consumer buying side, Munster estimates that the disruption in Japan will impact his March quarter revenue estimates for Apple by just under 1%, or $202 million. In the worst case scenario, assuming the company generates absolutely no sales in the region through the first half of the June quarter, he believes the negative effect would equate to just 2.7%, or $563 million.

The analyst maintained his Overweight rating and $483 price target on shares of Apple.

As such, the analyst expects component delays for some of Apple's key products, including iPhone 4 and iPad 2, to persist throughout the June quarter. That said, he notes that the company's investor community has historically chosen not to punish the company for supply-related issues as long as demand for Apple products remains strong. In this case, "demand is stronger than ever, which should move shares higher," he said.

So this is saying that investors won't punish Apple for not being able to meet demand because of the earthquake. Nice.

Quote:

Originally Posted by AppleInsider

Although the analyst isn't concerned with Apple maintaining its well-above-average profit margins during the March and June quarters, he does believe rising component prices as a result of the Japanese quake could apply some downward pressure on profits during the second half of the year as component prices may rise.

Many people are dead. Whole towns are gone. There may be a nuclear catastrophe.

But in the end it's all about my money. How is this going to affect my 401k? Will I be able to retire to the cream-of-the-crop golf condo community in Scottsdale, or not?

It's been less than a week. It takes a while to compile the numbers of what actually sold, for marketing to go back and readjust their estimates based on the surprisingly large demand, for the purchasing folks to run all of their numbers and contact their suppliers to find out if the suppliers can increase their production....ascertain where the bottlenecks are....etc...

And in the end it doesn't matter, because regardless of how many they can make, Apple will sell every one of them for some time to come. Due to the iPad's popularity, Apple is in the power position and doesn't need to explain themselves.

So this is saying that investors won't punish Apple for not being able to meet demand because of the earthquake. Nice.

Many people are dead. Whole towns are gone. There may be a nuclear catastrophe.

But in the end it's all about my money. How is this going to affect my 401k? Will I be able to retire to the cream-of-the-crop golf condo community in Scottsdale, or not?

People die every day in a vast number of different scenarios. Yes its a tragic event but life still goes on and people still have their jobs to do. What do you expect people to do? Stop doing their jobs and just feel sorry for those affected?

Screw those investors who would act like that. A serious situation has happened and they're worried about their money??? Screw them, cause if this was worldwide the last thing to worry about is your money, cause no amount of money can save you from death.

I finally made an effort this morning to get an iPad and was unsuccessful.

I arrived at the first Apple store this morning at 6 am and there were already about 300 people ahead of me in line. It was ridiculous, scalper after scalper. I would venture to guess that at least 75% of the crowd were Asian scalpers. Many of them had probably never even touched a computer before in their entire life. There were lots of real old people waiting also. Then came the announcement that there would be no iPads today at all!

So I jumped in a cab along with a few other people whom I had met on the line and we headed down to another Apple store which was near by. At 6:45 am there were about 400 people ahead in line already. It was also full of Asian scalper after Asian scalper. It looked like entire families were there. Insane! Two Apple employees came out at about 8:00 am and let people know where the cut off point for the line was. By that time, close to 1,000 people were waiting in line. I was way behind the cut off point, so I just left.

I'm not going to bother to get an iPad anytime soon from any Apple store. It's a waste of time to be spending hours waiting just to come up empty handed. Those scalpers are losers and have nothing better to do with their time than to spend 12 hours waiting each day. They camp out every single day.

I'm thinking about buying up every single chop stick in New York. After that, I will start selling them for $10.00 a stick. That's per single stick, not per pair. That'll teach those scalpers and the chop stick shortage will surely cause them numerous hardships and problems. And it certainly wouldn't be illegal if I did exactly that.

So this is saying that investors won't punish Apple for not being able to meet demand because of the earthquake. Nice.

Many people are dead. Whole towns are gone. There may be a nuclear catastrophe.

But in the end it's all about my money. How is this going to affect my 401k? Will I be able to retire to the cream-of-the-crop golf condo community in Scottsdale, or not?

I'm sure there are Japanese realtors already trying to acquire land from displaced and missing persons. Life goes on. Using human tragedy is a fine way to make money. Japanese-owned crematoriums are gleefully running 24/7. They undoubtedly wish for daily tsunamis. Nothing is more profitable than price-gouging during times of short supply. Why? Because humans are greedy. Nothing unusual here. Humanity and suffering goes hand in hand. There's always the hope that if you stockpile enough cash, you might be spared some of the suffering. If I were Japanese and had plenty of cash, I'd probably flee Japan before it comes a nuclear wasteland.

People die every day in a vast number of different scenarios. Yes its a tragic event but life still goes on and people still have their jobs to do. What do you expect people to do? Stop doing their jobs and just feel sorry for those affected?

Sure people die every moment of every day, but this is one event killing many people and destroying many peoples way of life, if only for awhile.Its also an event that does effect the worlds economy as noted by the article.

How many people in Japan are without a job right now? How many are without a home? Peoples whose primary concern was what couch to buy might now be radiation fallout, clean drinking water, and if they will get food this week.

Internationally, even if I dont directly sense it their loss will affect me in some way though commerce because we are a world economy. Sure, life does go on, but it does go on a little differently until Japan can rebuild its infrastructure.

Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"

I finally made an effort this morning to get an iPad and was unsuccessful.

I arrived at the first Apple store this morning at 6 am and there were already about 300 people ahead of me in line. It was ridiculous, scalper after scalper. I would venture to guess that at least 75% of the crowd were Asian scalpers. Many of them had probably never even touched a computer before in their entire life. There were lots of real old people waiting also. Then came the announcement that there would be no iPads today at all!

So I jumped in a cab along with a few other people whom I had met on the line and we headed down to another Apple store which was near by. At 6:45 am there were about 400 people ahead in line already. It was also full of Asian scalper after Asian scalper. It looked like entire families were there. Insane! Two Apple employees came out at about 8:00 am and let people know where the cut off point for the line was. By that time, close to 1,000 people were waiting in line. I was way behind the cut off point, so I just left.

I'm not going to bother to get an iPad anytime soon from any Apple store. It's a waste of time to be spending hours waiting just to come up empty handed. Those scalpers are losers and have nothing better to do with their time than to spend 12 hours waiting each day. They camp out every single day.

I'm thinking about buying up every single chop stick in New York. After that, I will start selling them for $10.00 a stick. That's per single stick, not per pair. That'll teach those scalpers and the chop stick shortage will surely cause them numerous hardships and problems. And it certainly wouldn't be illegal if I did exactly that.

A few points to note;
1. Gene Munster does not exactly know who Apple's raw component suppliers are. He is guessing, and whilst he may be 100% correct, he may also be 0% correct or somewhere in between.
2. It is not known how much raw material stock both the suppliers and the device manufacturers have. There would also be likely significant components in transit.
3. Many of these suppliers will have access to other plants which they could raise production, they will decide to do this depending on what happens with the component spot prices.
4. The iPhone 5 should be with us in 4 or 5 months time, so demand for the iPhone 4 will begin to fall soon. Yes, the iPad 2 is new and not managing to meet demand but we don't know where the blockage is (whether it is any of the components whose supply would be affected by the disaster in Japan).
5. Apple always has the option of delaying the international launch of iPad 2. Even delayed by 6 weeks, the competition will not be able to launch new products that will take market share away from Apple. Overall sales during the financial year will be likely unaffected.
6. Apple's actions since the disaster (letting people stay in Apple stores, emailing Japanese employers offering assistance) suggests that component supply from Japan is not their top priority, their employees and their families are.

Finally, as Apple has effectively pre-paid for essential raw components, the changes to spot prices will not affect Apple until these contracts have been fulfilled. They will also be at the top of the priority list for these suppliers, even higher than their own device units.

However all of this is insignificant when you think about the scale of the loss of life in Japan. timgriff84, you are right that people die everywhere, everyday but not on this scale.

My thoughts are will all those in Japan who have suffered as a consequence of the disaster.

I finally made an effort this morning to get an iPad and was unsuccessful.

I arrived at the first Apple store this morning at 6 am and there were already about 300 people ahead of me in line. It was ridiculous, scalper after scalper. I would venture to guess that at least 75% of the crowd were Asian scalpers. Many of them had probably never even touched a computer before in their entire life. There were lots of real old people waiting also. Then came the announcement that there would be no iPads today at all!

So I jumped in a cab along with a few other people whom I had met on the line and we headed down to another Apple store which was near by. At 6:45 am there were about 400 people ahead in line already. It was also full of Asian scalper after Asian scalper. It looked like entire families were there. Insane! Two Apple employees came out at about 8:00 am and let people know where the cut off point for the line was. By that time, close to 1,000 people were waiting in line. I was way behind the cut off point, so I just left.

I'm not going to bother to get an iPad anytime soon from any Apple store. It's a waste of time to be spending hours waiting just to come up empty handed. Those scalpers are losers and have nothing better to do with their time than to spend 12 hours waiting each day. They camp out every single day.

I'm thinking about buying up every single chop stick in New York. After that, I will start selling them for $10.00 a stick. That's per single stick, not per pair. That'll teach those scalpers and the chop stick shortage will surely cause them numerous hardships and problems. And it certainly wouldn't be illegal if I did exactly that.

Sure, that's true, but you can leave behind more for your descendants, or for charity, or fund more research into things that make the world better off, etc.

Regardless of global circumstances, I'd rather leave behind more than less.

Thats true, but these stockholders don't care about that... They don't care about life unless their life is in tragedy... but again what good is all this money, if your entire family is wiped out? what about the charity? ... its more then just money, money is one part of society not all, and if these greedy inconsiderate bastered shareholders, want to hold a company to the fire because of their supplies are limited due to a serious life threatening situation, then screw them man. forget those shareholders and their disregard for life.

Thats true, but these stockholders don't care about that... They don't care about life unless their life is in tragedy... but again what good is all this money, if your entire family is wiped out? what about the charity? ... its more then just money, money is one part of society not all, and if these greedy inconsiderate bastered shareholders, want to hold a company to the fire because of their supplies are limited due to a serious life threatening situation, then screw them man. forget those shareholders and their disregard for life.

You're missing the point. Really it's all about whether or not I can get an iPad ASAP without any supply chain disruptions.

This kind of midset dooms people in the West. The Bubble living westerners, who go in a panic when a winter storm is coming, will be utterly clueless when a earthquake or serious disaster happens.... Look at Katrina , rich america can't even help their citizens because they viewed those people as "not my problem" individuals... not to mention the undercover racism towards that area... let that be a affluent rich area and I bet the response would have been different.

One of the people I was waiting with was a Chinese guy, and he wasn't a scalper. He was just a Mac fan, just like me. And he gave me realtime translation of some of the scalper's conversations.

And here's a link to a major newspaper detailing the Asian scalpers.

A cutthroat Asian group has set its crosshairs on the flagship Apple store on Fifth Avenue at 59th -- scoring nearly every iPad 2 it can get its hands since the hot gizmo went on sale last week, to re-peddle at exorbitant prices here and in China.
The illicit, highly orchestrated scheme was in full gear yesterday, with a ringleader doling out massive wads of $100 bills to about five cohorts.

If he wasnt being racist when the repeated Asain scalpers and assumption that he knew that all the Asians were scalpers. Why not just scalpers, why are Asians so vilified in his post to the extent that he made a silly comment about buying up all the chopsticks so he stick it to all Asians because of some that stood in line on a cold morning waiting for an iPad? You really think his comment wasnt arrogantly narrow-minded? I dont see how anyone could read it any other way.

Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"

Well, whatever, I also took the plunge today and arrived at 5:00 am at Apple store in the Mall in Delaware. There were only about 20 vehicles in the car-park, with people waiting. As I approached the Mall door, police officers there told (in typical rude fashion) to us return and wait in our cars, until the mall opened the doors at 7:00. This apparently was on instruction from Christiana Mall 'management' By almost 7:00, hundreds were waiting in their cars, and for the stupid RUN to the door, kind of the old formula 1 start, but in reverse. So I see a lady pushed to the floor, then we were squeezed through a single door.
Needless to say Rather than being 20th in line, I was probably 200th. Now there was certainly lots of families in line, of course not enough iPads, so I left at 8:30
Scalpers, stupid management, and silly police tactics meant that those who had made the effort to arrive early enough were denied. I can run too, but this is getting to be ridiculous.
And being in line, would it not make more sense, and be fairer for Apple to hold off shipments for week or so, so those of us that ordered on line much earlier (like within the first 48 hours) were serviced first? Even I wonder of Apple is enjoying the publicity even more, at consumers expense.
just a thought

But in the end it's all about my money. How is this going to affect my 401k? Will I be able to retire to the cream-of-the-crop golf condo community in Scottsdale, or not?

Maybe it's just will I have enough money in retirement to pay my basic living expenses. Maybe it's that even when the Dow hit a recent high of 11,400 a few weeks back, that was still almost 3000 points below its all-time peak in October of 2007 and that's 25% below where we were almost four years ago and it's painful to see it take another big hit. And maybe, even though one is willing and able to continue working, that there's few jobs for such people, because of both the state of the economy and bias against older people (if only because their experience generally gets them more money), so they have no choice but to retire.

That's not to say that I don't care about what's happening in Japan. Whatever I'm facing economically is trivial compared to the horrors that people in Northern Japan are facing. Hundreds of thousands homeless. Homes and factories gone or damaged that will probably take years to rebuild. Lack of adequate power for years to come, since those damaged reactors can never be put back online. Damage far greater than that the U.S. experienced during 9/11. Thousands, maybe even tens of thousands dead. A very aging population, especially in the areas hit. Nuclear radiation...fears of aftershocks and/or another earthquake.

But all that doesn't mean that another fall in the worldwide economy isn't going to have big negative impact on people here - both on workers and investors. My bet is that you're below 40. If I were still below 40, I wouldn't be too worried about my investments (because I barely had any back then.) But every change in my asset values has big impact on whether I'm going to have enough money to live on in my retirement, especially if I live long.

Meanwhile, I think that even if there are some parts shortages, Apple will do fine in the long run. When the stock went down yesterday, I bought a few more shares. Seemed like a bargain to me.

Which NYC store will prob give me the best chance of getting an Ipad tomorrow (friday)? Im closer to the one on 5th (cube) followed by the one on 68th (Lincoln Center) Also, what time should I get out there? 4am , 5am?

Well, whatever, I also took the plunge today and arrived at 5:00 am at Apple store in the Mall in Delaware. There were only about 20 vehicles in the car-park, with people waiting. As I approached the Mall door, police officers there told (in typical rude fashion) to us return and wait in our cars, until the mall opened the doors at 7:00. This apparently was on instruction from Christiana Mall 'management' By almost 7:00, hundreds were waiting in their cars, and for the stupid RUN to the door, kind of the old formula 1 start, but in reverse. So I see a lady pushed to the floor, then we were squeezed through a single door.
Needless to say Rather than being 20th in line, I was probably 200th. Now there was certainly lots of families in line, of course not enough iPads, so I left at 8:30
Scalpers, stupid management, and silly police tactics meant that those who had made the effort to arrive early enough were denied. I can run too, but this is getting to be ridiculous.
And being in line, would it not make more sense, and be fairer for Apple to hold off shipments for week or so, so those of us that ordered on line much earlier (like within the first 48 hours) were serviced first? Even I wonder of Apple is enjoying the publicity even more, at consumers expense.
just a thought

wow your a local, I use to work at the christiana mall apple store, before they got the big new store near that nordstrams, I worked at the smaller store, even before the mall did a re-vamp... The "scalping thing" is a personal thing, I have no problem with them doing that, but when I was in line for iPad 1, they actually wanted me to help them, I said "nah" but have fun.

I say don't include me in your scheme, not to mention ALL apple employees know what they're about, when I worked their, all I said was how many iPhones do you want?? They're the reason the iPhone supply was always limited to 2 per person.

As for Munster, he has no actual facts. He is speaking of companies he is guessing are supplying to Apple but he could be wrong. it could also be that he is right but Apple has bulked ordered and everything is already in China and just awaiting assembly and that is what is holding things up. Cause after all, these are humans not robots.

It is possible that Apple is monitoring to make sure Foxconn isn't pushing the lines too hard or fast (and thus possibly screwing up units with sloppy work) and forcing too much OT etc on the workers to produce way over quota etc.

As for the issue of scalpers, I'm thinking Apple should go to reservations only for here out. It would reduce the lines cause folks wouldn't show up until they have a unit on hand waiting for them for the day and it would cut back on scalpers cause they won't go to that much fuss. Plus the system can monitor for duplicate names, emails, etc and freeze reservations if it sees a match.

Quote:

Originally Posted by Kravemas

Which NYC store will prob give me the best chance of getting an Ipad tomorrow (friday)? Im closer to the one on 5th (cube) followed by the one on 68th (Lincoln Center) Also, what time should I get out there? 4am , 5am?

Any info will be much appreciated!

New York is the worst place to go. Because you'll have to get there more like 6pm today to be in line for tomorrow. On the plus side, you could always narc if you see suspicious stuff that could be scalpers. Like folks going down the line offering cash for second units etc. Maybe if someone did that, the staff would be able to cut those folks off. After all it is legal to say no to a customer and refuse them service. Even with cold hard cash in their hands. Although I am surprised there are cops doing traffic control and staff already out there watching for that kind of stuff. Especially after these articles. So that might be settled by now. But the lines will still be massive

Even I wonder of Apple is enjoying the publicity even more, at consumers expense.
just a thought

How does that make sense? Apple wants to get as many iPads into consumers hands as possible. Thats how they make money! They dont want consumers to get discouraged or annoyed or trampled. Thats not how they make money! The mall is clearly at fault for issuing a stupid rule that not only defeats the first-come-first-serve for people willing to arrive early to wait in line, but also makes the situation harmful and a potential lawsuit if people cant wait quietly in queue but have to race from their cars and risk being trampled, as you stated. Im not sure how Apple could be at fault for that poor decision.

Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"

Which NYC store will prob give me the best chance of getting an Ipad tomorrow (friday)? Im closer to the one on 5th (cube) followed by the one on 68th (Lincoln Center) Also, what time should I get out there? 4am , 5am?

Any info will be much appreciated!

I visited the Lincoln Center store first today, as I assumed that would give me the best chance, but they had nothing today, zero iPads. And even that store has now become infested with scalpers. I got there at 6 am today and I wasn't even close to getting one, if they had had any in stock. So you'll probably have to get there a lot earlier than that. Remember, you're competing against hundreds of people who are all part of a gang. They can just make a phone call and Boom! 50 people show up.

The one on Fifth Ave is insane, and don't be surprised if thousands are waiting there with the majority also being sleazy scalpers.

The best you can do is just to choose one, arrive real early, and hope to get lucky.